Caroline Moody, Managing Director, Moody Logistics & Storage, writes for The Journal. The rising cost of fuel is a regular topic of conversation and a constant frustration for drivers and business owners alike.
The AA recently reported that UK pump prices have risen to their highest level in four years – despite the price of crude oil falling slightly in recent weeks – which has meant consumers have had to salami slice the pound in their pocket even further. Anyone who has pulled into a petrol station in recent weeks will have seen prices on the glowing LED boards of anywhere between 129p and 133p a litre - in rural areas, in places like Northumberland, it will be even higher. While these kind of prices were previously only paid for by the captive audience of motorway services, they are becoming the norm. The last time prices were this high was 2011, which sparked the start of the Government’s freeze on fuel duty, but more on that later.
But of course, as well as every motorist, the impact of high fuel costs are also felt by the haulage and logistics industry. And while for an industry like ours fuel might be seen as a ‘cost of doing business’ the impact on our industry is also be felt by the consumer. According to statistics from the Road Haulage Association, 89 percent of all goods transported by land in Great Britain are moved directly by road. In addition, the goods not moved by road needs road haulage to complete journeys to and from ports, airports or rail terminals. And to bring that in to context and a little bit closer to home for practically everyone in the country, consider this, the clothes you are wearing, the chair you are sat on, the coffee you are drinking, the mug it’s held in and the copy of the Journal you are reading right now, will have been handled by the logistics supply chain. So while the internet has become the new home of retail with items purchased at the click of a mouse or touch of a screen, all of them will have been in the back of a van or Heavy Goods Vehicle (HGV) on the UK’s highways and byways before it reaches the customer’s door. From our base in Cramlington, our business, Moody Logistics, handles 2,000 pallets carrying a total of 800,000 kgs of products every week, which are destined for shops and people’s homes. As a result, the haulage and logistics sector has become even more essential to the UK's finances. It employs 2.54 million people and is worth £124 billion to the economy. But despite the vital role it plays, it is a sector that is quickly affected by all manner of outside influences. Some things can’t be controlled, such as extreme weather conditions, but others, such as roadworks, and indeed poorly maintained roads, and, of course, fuel costs can be better managed by those in power. All this means that if costs go up for our industry there is a very real likelihood that they will be passed on to the consumer in the shape of higher prices for goods. It is essential, therefore, that the freeze of fuel duty remains at the very least, as product manufacturers, retailers and the haulage sector try to absorb as much of the fuel price rise without it impacting on consumers. There is an argument for scrapping the freeze, which was discussed in a new report from former transport government advisor Professor David Begg. In his report he suggests that the Government’s decision to not raise fuel duty since 2011 has contributed to up to 12,000 tonnes of NOx emissions from increased traffic. He has also calculated that as a direct result of the fuel duty freeze prices at the petrol pump, they are 13 percent lower than they otherwise would be. Considering the fuel price increase we’re already experiencing, another 13 percent would be crippling, affecting every level of the distribution chain from manufacturers, through to retailers, the logistics sector and the consumer. But, as a sector we are not looking at controlling costs at the detriment of the environment. As in so many other areas of society, technology is playing a significant role in developing vehicles that are cleaner and more efficient. With more and more HGV vehicles on the road meeting the much stricter Euro 6 emission regulations and progress being made in developing alternative fuel solutions from electric to Liquid Natural Gas (LNG), manufacturers and the haulage and logistics sector are proactively addressing their environmental responsibilities. And add to this, there are companies within the vehicle manufacturing supply chain making a positive contribution, such as GT Group in Peterlee with its innovative valves that recirculate exhaust emissions to be used in breaking systems rather than releasing them into the environment. Alongside technology, our sector has also become far more efficient and environmentally-friendly with the creation of the Overnight Pallet Distribution model. Moody is part of the nationwide PallEx network, which promotes vehicle efficiency by ensuring trucks are running fully-loaded in comparison to general haulage where they can run half empty or totally empty on return journeys. The cost of fuel remains a precarious issue for our industry and all other road users and it is time for greater transparency from fuel producers, retailers and government. Rises are often blamed on geo-political arguments between countries like USA and Iran, but when the price of oil falls, very rarely does it translate to the price at the pumps. The FairfuelUK campaign believes that there should be an independent price monitoring body to make price changes transparent, which would go some way to stabilising and even reducing the cost of fuel. It is essential for our industry, the nation’s motorists and the goods we all consume every single day.